EMV Chips On Debit And Credit Cards Have Pushed Fraud To E-Commerce

Forbes conducted an interview with Michael Graff, a risk analytics manager at Radial, an e-commerce fraud fighting specialty group that was spun out of eBay. It highlights some of the ways that the makeup of card fraud is changing as more transaction are conducted in card not present channels. The impact from the Equifax breach is definitely being felt and the greater frequency of international transactions is creating the need to change fraud tactics. Some of the highlights from the article include:

Radial saw a spike in fraud from July on which didn’t make sense until it learned about the Equifax breach. Radial saw a 300% to 600% increase in e-commerce fraud correlated with the Equifax breach.

“A lot of merchants are scared of transactions that have an international aspect,” Graff said. “If you have a billing address in one part of New York City and are shipping to a different city address and the IP address is coming from Germany and your credit card is from the UK and the purchase is over $5,000 it may get a fraud investigator to look at it personally.”

The key indicators they (merchants) should look at are: what is your approval rating, how many transactions do you decline due to fraud, who is liable for fraud the system does let through and how what percentage of orders are held for review.

Visa/Cybersource has said that a 97.5% approval rate is a good benchmark for the e-commerce industry. Radial’s approval rate can be above 99.5%, said Graff, depending on the vertical, client risk and other factors.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group